Asian economic downturn
The benefits Mitsubishi Motors had seen because of its strong presence in Southeast Asia reversed themselves as a result of the economic crisis in the region, which began in 1991 with the advent of the collapse of the Japanese asset price bubble, referred to in Japan as the beginning of the Lost Decade and continued to 1997. The collapse was partly the result of the Plaza Accord agreement in 1985, which sought to equalize the United States dollar with the Japanese yen and the German mark. In September of that year, the company closed its Thai factory in response to a crash in the country's currency and plummeting consumer demand. The large truck plant, which had produced 8,700 trucks in 1996, was shut down indefinitely. In addition, Mitsubishi Motors had little support from sales in Japan, which slowed considerably throughout 1997, and were affected by that country's own economic uncertainty into 1998.[61]
Other Japanese automakers, such as Toyota and Honda, bolstered their own slipping domestic sales with success in the U.S. However, with a comparatively small percentage of the American market, the turmoil in the Asian economy had a greater effect on Mitsubishi Motors, and the company's 1997 losses were the worst in its history. In addition, it lost both its rank as the third-largest automaker in Japan to Mazda, and market share overseas. Its stock price fell precipitously, prompting the company to cancel its year-end dividend payment.[61]
In November 1997, Mitsubishi Motors hired Katsuhiko Kawasoe to replace Takemune Kimura as company president. Kawasoe unveiled an aggressive restructuring program that aimed to cut costs by ¥350 billion in three years, reduce personnel by 1,400, and return the company to profitability by 1998. While the program had some initial success, the company's sales were still stagnant as the Asian economy continued to sputter. In 1999, Mitsubishi Motors was forced once again to skip dividend payments. Its interest-bearing debt totaled ¥1.7 trillion.
Vehicle defect cover-up
In what was referred to as "one of the largest corporate scandals in Japanese history",[62][63] Mitsubishi Motors was twice forced to admit to systematically covering up defect problems in its vehicles. Four defects were first publicized in 2000, but in 2004, it confessed to 26 more going back as far as 1977, including failing brakes, fuel leaks, and malfunctioning clutches. The effect on the company was catastrophic, forcing it to recall 163,707 cars (156,433 in Japan and 7,274 overseas) for free repair.[64]
Further recalls by Fuso Truck and Bus brought the total number of vehicles requiring repair to almost one million. The affair led to the resignation and subsequent arrest of president Kawasoe, along with 23 other employees who were also implicated.[65] Three of them have since been acquitted, with the judge stating that no official request from the Transport Ministry ordered them to submit a defect report.[66]
0–0–0
In an effort to boost sales in the U.S. in the early 2000s, Mitsubishi Motors began offering a "0–0–0" finance offer—0% down, 0% interest, and $0 monthly payments (all repayments deferred for 12 months). Initially, sales leapt, but at the end of the year's "grace period", numerous credit-risky buyers defaulted, leaving the company with used vehicles for which it had received no money and which were now worth less than they cost to manufacture. The company's American credit operation, MMCA, was eventually forced to make a US$454 million provision against its 2003 accounts as a result of these losses.[67] As a result, sales plummeted to 243,000 in 2003, 139,000 in 2004, 124,000 in 2005, and 119,000 in 2006.[68]
End of Australian production
In October 2005, Mitsubishi Motors Australia introduced the Mitsubishi 380 to the Australian market as the replacement for its long-running Mitsubishi Magna, and the sole vehicle being built at its Australian assembly plant at Clovelly Park. Despite an investment of A$600 million developing the car, initial sales projections proved optimistic; after only six months, Mitsubishi scaled back production from 90/day, and reduced the working week from five days to four.[69] The Australian auto industry remained concerned as to whether this would be sufficient to restore the plant to profitability and ensure its long-term survival.
The drop in local sales could not be mitigated by exports outside of the Australian and New Zealand markets. On 5 February 2008, Mitsubishi Motors Australia announced it would be closing down its Adelaide assembly plant by the end of March. Between 700 and 1,000 direct jobs would be lost and up to 2,000 jobs would be lost in industries supporting Mitsubishi's local manufacturing operations.[70]
End of Western European production
With operating losses ¥22 billion ($287 million) in Europe for the fiscal year to March due to stagnant sales in a continent beset by uncertainty of a raging debt crisis, in February 2012, Mitsubishi Motors decided to end production in Western Europe by the end of 2012.[71][72] On 1 October, it announced that the Dutch industrial conglomerate VDL Groep had taken over NedCar from Mitsubishi Motors, retaining all 1,500 employees.[73]
End of North American production
In 1988, Mitsubishi Motors opened a production facility in the United States in Normal, Illinois. The facility was known as Diamond-Star Motors, and was initially a joint venture with Chrysler, but Chrysler sold its stake in the plant to Mitsubishi in 1993. After 1995, the facility was known as Mitsubishi Motors Manufacturing America (MMMA). At its peak in 2000, the facility produced over 222,000 vehicles per year, but following the decline of Mitsubishi Motors in North America, the plant operated well below capacity for years.
In July 2015, Mitsubishi Motors announced that it would close the plant by November, but would continue to sell automobiles in North America. In 2014, the plant had produced just 69,000 vehicles, roughly one-quarter of its capacity.[74] Production at the plant ended on 30 November 2015, and most of the employees were laid off. The plant continued to operate with a minimal staff to produce replacement parts until May 2016, after which it closed permanently.[75]
Withdrawal from UK market
Mitsubishi Motors announced that the company would leave the UK market due to financial reasons by autumn 2021.[76] Since then, Mitsubishi's British presence is limited to aftersales service.[77]
Withdrawal from Chinese market
Mitsubishi Motors announced its withdrawal from its joint venture GAC Mitsubishi in the Chinese market in October 2023. As part of this exit, GAC Group will take over GAC Mitsubishi's plant in Changsha to produce GAC Aion electric vehicles.[78] This did not affect the Shenyang Aerospace-Mitsubishi Motors engine manufacturing joint venture, which continued production to supply engines to local Chinese automakers and provide aftersales service for Mitsubishi vehicles.[79]
After being established in 1997 and beginning production in 1998 to produce engines for Mitsubishi vehicles and to prominently supply at the time fledgling local Chinese automakers, Mitsubishi announced that it was exiting the Shenyang Aerospace-Mitsubishi Motors Engine Manufacturing joint venture on 22 July 2025. Mitsubishi stated that it made the decision due to the Chinese auto industry's rapid shift to electric vehicle, and it marks the complete exit of the company from the Chinese market.[79]
Fuel economy scandal
In early 2016, Mitsubishi Motors partner Nissan found discrepancies between Mitsubishi information and actual fuel consumption while working in new micro (kei) cars for both companies, the eK Wagon, eK Space, Nissan Dayz, and Nissan Dayz Roox.[57] At the time, Mitsubishi Motors manufactured micro cars for Nissan, which had never produced that class of vehicle itself. Mitsubishi Motors admitted that they had been giving incorrect information on fuel consumption from 2002 onwards, using inaccurate test methods.[80] Later, the company said it used fuel-economy testing methods that did not comply with Japanese regulations for 25 years, much longer than previously known.[81]
Mitsubishi Motors management said they were unaware about the issue and that the incorrect information came from the micro car development department, NMKV. They ordered an investigation led by investigators not affiliated with the company.[82] The resultant scandal culminated in Nissan acquiring a controlling interest in MMC in May 2016.[83]
